A day to remember. Equity crowdfunding is regulated in Italy, here is how the market will work

Consob (the Italian SEC) has published today the final regulation to operate an equity crowdfunding portal. From today Italian startups (first in the world) will have a regulated instrument to really enter the market and realize their projects, fundraising online.

In the next months several portals will launch in Italy and they will offert this new opportunity. Startups will be able to post their business plans and accounts online, and that the general public will be able to subscribe a small share of their capital online.

Italy is the first country in the world that has a regulatory framework for equity crowdfunding, after having recognized its transformative impact by inserting it in the Economic development decree, issued by the previous Monti government. I think this is something we as Italians should be proud of.

Today is a day to remember, since from now many things can change in the economic outlook of the Italian economy. Some objected that several countries (Australia, UK, Netherlands for example) have equity crowdfunding without the need of any kind of regulation. True, but having one means that since we now have a stable regulatory framework in this business, a lot of people that would not touch the sector are now able to invest.

Regulation is also essential as a mean to protect investors, and therefore necessary to develop an healthy market.

The regulation provides that authorized operators which will be inserted in a special registry, vigilated by Consob, will be able to offer on their portal equity instruments, issued by innovative startups. Such operators will have the role to ensure that documentation and information provided by the issuers is complete, clear and transparent. Crowdfunding portal operators are not allowed to provide any kind of investment reccomendation to the public and will have to ensure that subscribers have understood what they are buying and the risks connected to it, though an online questionnaire.

Portals will have the role to collect orders and send them through authorized intermediaries, that will have a simplified management, as long as the amounts are below 500 euros on a single order and a total of 1000 euros on an annual basis.

The law provides that besides banks and financial intermediaries a new category of managers will be autorized, provided they have specific experience and professional requirements. The important thing will be that such managers will have to operate exclusively for  single portal.

Startups that will want to issue fundraising campaigns, will have to provide the portal operators will all the relevant information, which will be subject to some rules:

– they will have to provide a clear, complete and transparent set of informations about their company and business plan

– subscribers will have the right to cancel their order until 7 days since the order is transmitted

– subscribers will have the right to sell shares back to the company in case of a ‘change in control’ in the company corporate structure

In order for the campaign to be completed, the startup will have to make sure that at least 5% of their offer is subscribed by a professional investor, according to the law provisions. This is an important matter, where Consob has clarified on a topic that has been largely discussed in the past weeks. Startups will be able to issue an offering freely but only such campaign whereas 5% has been subscribed by professional investors will complete.

Consob will keep monitoring key indexes and kpi of the market in the coming months, in order to potentially fine tune the regulation in the next months.

With such instruments the outlook for startups in our country has radically changed today. We are the only country in Europe to have a law for crowdfunding and the first in the world to have regulated environment, injecting a significant dose of innovation in the ecosystem.

It is the beginning of a process of democratization of finance and the means of production and if Consob will be successful in building a large and healthy market, from today everything has changed for startups in Italy.



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